Transforming Client Certification at BM&FBOVESPA

Certifying an exchange client is a lengthy process that can be made easier with automation.

Exchanges everywhere are looking for new ways to attract and retain market volume in this fiercely competitive environment. However, this task is not always easy, given that developing new offerings to attract flow can put a drain on even the most successful exchange’s resources. Not long ago, Latin American exchange BM&FBOVESPA faced this challenge. The exchange wanted to differentiate itself by offering clients a superior user experience. But it also wanted to ensure that spending didn’t spiral out of control in the process.

What is exchange certification?The series of tests that an exchange member must complete prior to trading on the exchange. This ensures that participant trading systems will be able to interact properly with the exchange’s systems without encountering major technology or trading errors.

Committed to high standards, BM&FBOVESPA has a robust certification program. But the entire certification process was being handled manually. This made it very time-consuming for internal staff to get market participants set up on new markets and asset classes. BM&FBOVESPA needed to find a new way to reduce the costs and manpower attached to the certification process.

The value of thorough testingBM&FBOVESPA’s certification process requires participants to run through a large number of test cases. It has about 135 certification test cases in total. This approach helps ensure that clients are better prepared to begin trading on its platform, according to the exchange.

“Think about getting your driver’s license,” says Jacob Northey, managing partner at Lasalletech. “Some regions will give you a license if you show that you can get in the car and put your key in the ignition. With some exchanges, that’s about all it takes to start trading on their platform. Exchanges that require extra testing help minimize the possibility of clients hitting unforeseen problems.”

Considering automationWhile BM&FBOVESPA’s robust certification processes are valuable to clients, performing the tests manually was putting a major strain on resources. The typical process of certifying a connection manually is quite cumbersome. Any area of non-conformance between the exchange’s system and a client’s system is discovered one message at a time. Not only can this protracted approach frustrate clients who want to start trading quickly, it also slows the onboarding process for the exchange.

Therefore, management at BM&FBOVESPA decided that automation was necessary. After a thorough vendor evaluation, they selected Lasalletech’s FIX Conductor to automate certification testing, along with FIX Technician for writing the tests. “We look for automation opportunities in every single manual process that we perform,” explains Ricardo Redenschi, IT director at BM&FBOVESPA. “Automating testing saves us time and money. Now we don’t have to rebuild code. We can simply automate and reuse it. For instance, after applying around 80% automation to a test, we’ve seen cost savings up to 95%.”

Speeding up interface developmentAccording to BM&FBOVESPA, clients also save time. The platform allows them to develop their interfaces more quickly. “When they feel they are ready, they are able to start testing against our certification environment using the ‘My CTC’ interface, powered by FIX Conductor,” says Jeferson Martin, IT senior manager at BM&FBOVESPA.

Marcos Biazon, certification and testing center leader at BM&FBOVESPA adds, “We wanted to make certification the same for every client, while also being more responsive to their needs. Automation aids us in accomplishing these goals, and helps us support a greater number of clients at one time.”

Previously, staff had to block out four hours of time to devote to certifying a single client, and one of these sessions was typically not enough to finalize a certification. The manual process typically took about nine days. Now, with automation, the certification timeframe has been reduced by 67%, down to just three days.

Adding testing sophisticationAnother downside of relying on manual certification testing is that it makes testing more complex scenarios prohibitively difficult. In traditional testing, staff will typically evaluate very simple cases. On the other hand, an advanced platform easily automates the entry of tens or even hundreds of data points for tests that are closer to real-world scenarios.

Adding greater sophistication into certification testing was an area high on BM&FBOVESPA’s wish list. “We wanted to improve the complexity of our test cases. Doing this with manual testing would have been far too time-consuming. We simply don’t have enough staff to support that. By automating, we’re able to add complexity to the scenarios,” says Biazon.

Enhancing client relationshipsBM&FBOVESPA reports positive feedback from clients regarding its automated certification practices. “Some of the steps in our process are mandatory for all clients, while others are optional. The way we have it set up is that all the mandatory steps are fully automated,” he says. “Clients prefer this approach because it’s efficient. They also like using an interface that allows them to perform testing at any time of day without setting an appointment with our staff.”

Future plansAdopting an automated approach to client on-boarding and certification has helped BM&FBOVESPA improve customer satisfaction, increase testing sophistication, conserve manpower, cut costs, and reduce the time it takes to certify clients by 67%. Improved control is another area where the exchange has seen many positive results. “Quick and accurate metrics are the best inputs to drive decisions. We can obtain these using automation,” says Martin. “Investing in automated testing technology is helping us increase quality coverage for our clients, lower operational costs, and significantly reduce our time to market.”

Candyce Edelen is CEO of PropelGrowth, an agency helping financial technology companies develop and implement go-to-market strategies. Prior to PropelGrowth, she co-founded two financial technology companies including Selero, a company that provided order routing gateways, ... View Full Bio